07/01/2024 | 4 Comments
The change in the financial landscape is an ever-evolving process as things move forward with time. Especially after the arrival of new-age technologies, new concepts have developed in the financial world. One of these new financial products is peer-to-peer lending, also known as P2P lending. It is where you can lend and borrow money without any intermediaries like banks. Just sign up on these P2P platforms and get ready to meet borrowers and lenders from diverse financial backgrounds. Peer-to-peer (P2P) lending platforms have emerged as popular alternatives for obtaining loans as they offer a number of advantages in comparison to traditional banks.
In this brief guide, we will explore why opting for P2P platforms can be a smart move in comparison to traditional banking when you are looking for loans. So, let’s look at the major P2P lending advantages:
Top Reasons to Choose P2P Platforms Instead of Banks for Loans
Here are some reasons advantages of P2P loans over bank loans:
Better Interest Rates
The crux of P2P vs. traditional loans – lower interest rates! This is one of the major reasons why P2P lending is becoming popular amongst people. While traditional banks often have higher operational costs, which leads to higher interest rates on loans, P2P platforms, on the other hand, operate with lower costs and hence, offer competitive interest rates. Moreover, as many investors compete to fund loans on the P2P platforms, you may get more favourable terms than those offered by banks.
Quick Approval and Disbursal
It is sometimes too annoying when you keep looking for loans and do not get approval for weeks. However, the situation is different with P2P platforms as P2P loans can get quick approval and disbursal. Unlike traditional banks that follow multiple procedures and take weeks to process a loan application, P2P lending platforms make use of the technology to the fullest to facilitate loan approval and disbursal. Sometimes you can get your P2P processed within just a few hours.
Transparency
Another significant reason is the transparency that you enjoy throughout the borrowing process. When you avail loans on these platforms, you get detailed information about loan terms, interest rates, and fees, and this allows you to make the right decisions as per your financial goals. On the other hand, traditional banks sometimes have complex fee structures and hidden charges, which you are not even aware of when you avail a loan with them. This makes it challenging for you to fully understand the cost of your loans.
Better Eligibility
One of the significant peer-to-peer loan benefits is that you have better chances of meeting the eligibility criteria of P2P loans in comparison to the strict eligibility criteria that traditional banks have. Unlike bank loans, you can usually get loans with the P2P platforms even if you have a lower credit score. This approach widens the pool of eligible borrowers and hence, gives individuals with diverse financial profiles the opportunity to access funding.
Diverse Borrowing Options
One of the biggest advantages of these P2P online lending platforms is that they offer a variety of borrowing options to cater to your different needs. So, whether you are looking for a personal loan, business loan, or student loan, these P2P platforms have a range of lending categories for you. This diversity allows you to find loans designed as per your specific requirements and aligned with your goals.
Flexible Repayment Terms
You also have flexible repayment terms when you avail a P2P loan. These P2P platforms do not have rigid repayment schedules unlike traditional banks and often allow borrowers and lenders to negotiate terms that suit both of them. Hence, you can avail flexibility in loan tenure and repayment frequency. This is quite advantageous for people who have variable income streams or those who are seeking personalised repayment schedules.
